What are Shares for Reading Answers

Mar 14, 2024

What are Shares for Reading Answers is an academic reading answers topic. What are Shares for Reading Answers have a total of 14 IELTS questions in total. This topic has 5 questions in which we have to fill up the black choosing appropriate paragraphs. The next five questions we have to say whether the statement is true or false. The next 4 questions are fill in the blanks with no more than three words.

Candidates should read the IELTS Reading passage thoroughly to recognize synonyms, identify keywords, and answer the questions below. IELTS Reading practice papers, which feature topics such as What are shares for Reading Answers. Candidates can use IELTS reading practice questions and answers to enhance their performance in the reading section.

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Section 1

Read the Passage to Answer the Following Questions

What are Shares for

A company which is registered on the stock exchange offers shares under its ownership to anyone who wants to buy them. A large company may issue tens of millions of shares. Among different types of shares, the most common are called 'ordinary shares. When you buy one, you become partner, or shareholder in the company, and share profits, attend board meetings and vote on key issues and appointments. You can sell your shares anytime you want.
The price of a share gets regularly updated; it may have not much relation to the cash value of the company if all its assets gets sold. In cases where the company owned buildings were grossly undervalued than it should have been. In contrast, when the stock markets is climbing, many companies are valued at sky high prices in the stock market than their real value As such, there are new challenges to valuation like how do you value a high-tech company whose products keep on changing every two months, and whose bread earners are its talented employees? The constantly changing difference between the market capitalisation (the total value of all a company's shares at the current market price) and the 'real' value is one of the great topics of stock market evaluation.
Shares are a volatile property- their prices do not remain steady as people buy and sell them continuously. A lot of factors influence the share price, including company analysis, change in politics, natural disasters, cold wars and economic up-downs. One of the main factors is the behaviour share holders. If huge chunk of investors think the price of a share is going to rise and buy it, the price of the share will rise until they stop buying. This kind of volatility is a temporary phase. In the long term shares in reputed companies are thought to be good investments than those in bad companies.
The capitalist financial system's big business is central to the world's present economic system. Since the 1990s, there has been no other system competing with it. Thus, people who want to increase their assets must learn how it works, and will decide to participate in the system at some point in their lives. The strongest, best-established companies are known as 'Blue chips'. The world of the casino gave it the name Blue chips, where they are those with the highest value. The other term - 'secondary issues' are shares in solid companies. These have slightly low confidence than the blue chips. "Growth stocks" are shares in newer companies that are supposed to do quite well in the time to come, but which may not do so Finally, there are the "penny shares", which belong to companies with a low value, but which may increase for some reason or the other.
Companies normally start out by being privately owned. Later when they expand, the owners may opt to go 'public' and sell some shares on the stock market. There are strict rules of going public, the company must be worth buying. The advantage to the original owners is that they can realise very large sums of cash if the offering is successful. However, some owners prefer to keep control in their hands by staying private, while others may buy back all company shares and return the company to private ownership. Taking a stock market listed company back into private ownership is though rare, but when it is done the aim is usually to strengthen control over decision-making process. For instance, business tycoons may decide they can do a better job of building the business by making a company private because the red tape and other shareholders interference is much less.

Section 2

Solution and Explanation

Questions 1-5

Which paragraph contains the following information ?

Write the correct letter, A-E.

Also, you may use any letter more than once.

a lack of connection between company viability and price of shares —

Answer: C
Supporting statement: “........ Shares are a volatile property- their prices do not remain steady as people buy and sell them continuously. A lot of factors influence the share price, including company analysis, change in politics, natural disasters,
cold wars and economic up-downs..........”
Keywords: cold, ups
Keyword Location: para 2, line 3
Explanation: It is given that the shares are a volatile asset. The share prices has a very less connnection company viability.

the rights of shareholders in a company -

Answer: A
Supporting statement: “.......When you buy one, you become partner, or shareholder in the company, and share profits, attend board meetings and vote on key issues and appointments. You can sell your shares anytime you want...........”
Keywords: shareholder, issues
Keyword Location: para A, line 3
Explanation: It is given that the rights of shareholders are not known by them. They become partners or shareholders in the company.

reasons given by companies for seeking shareholders investment -

Answer: E
Supporting statement: “.......Companies normally start out by being privately owned. Later when they expand, the owners may opt to go 'public' and sell some shares on the stock market..........”
Keywords: expand, shares
Keyword Location: para E, line 1
Explanation: It is given that the reason for the companies is that they start as privately owned. Later the go public to increase their funding for more growth.

reasons for changes in what people pay for shares -

Answer: C
Supporting statement: “........One of the main factors is the behaviour share holders. If huge chunk of investors think the price of a share is going to rise and buy it, the price of the share will rise until they stop buying..........”
Keywords: holders, share
Keyword Location: para C, line 4
Explanation: It is given that the reason of share price depend on the sentiments of the shareholders.

the basic structure of business dealings worldwide -

Answer: D
Supporting statement: “.......The capitalist financial system's big business is central to the world's present economic system. Since the 1990s, there has been no other system competing with it..........”
Keywords: present, competing
Keyword Location: para D, line 1
Explanation: It is given that the capitalist financial systems are the ones that run the present economic system.

Questions 6-7

Choose NO MORE THAN THREE WORDS from the passage.

What type of organisation may be difficult to value? -

Answer: HIGH TECH COMPANY
Supporting statement: “........As such, there are new challenges to valuation like how do you value a high-tech company whose products keep on changing every two months, and whose bread earners are its talented employees?.........”
Keywords: high, months
Keyword Location: para B, line 5
Explanation: it is given that the high tech companies are changing every two months. Hence they are difficult to value.

What we call to the combined value of shares at a particular point in time ? -

Answer: MARKET CAPITALIZATION
Supporting statement: “...... The constantly changing difference between the market capitalisation (the total value of all a company's shares at the current market price) and the 'real' value is one of the great topics of stock market evaluation. .......”
Keywords: capitalization, great
Keyword Location: para B, line 8
Explanation: it is given that the total value of the shares after a particular point is called market capitalization.

Questions 8-10

Choose NO MORE THAN THREE WORDS from the passage.

From where does the term used to describe the most secure shares derived ? -

Answer: CASINO
Supporting statement: “......... The world of the casino gave it the name Blue chips, where they are those with the highest value........”
Keywords: casino, highest
Keyword Location: para D, line 5
Explanation: It is given that the most secure shares were called casino.

What we call to untested but risky shares with rising value potential ? -

Answer: GROWTH STOCKS
Supporting statement: “....... "Growth stocks" are shares in newer companies that are supposed to do quite well in the time to come, but which may not do so Finally, there are the "penny shares"..........”
Keywords: suppose, finally
Keyword Location: para D, line 9
Explanation: It is given that the growth stocks are the shares that will work well in the upcoming years.

Who has the power to delist company from stock exchange, in order to regain control ? -

Answer: TYCOONS
Supporting statement: “.........For instance, business tycoons may decide they can do a better job of building the business by making a company private because the red tape and other shareholders interference is much less.........”
Keywords: business, shareholders
Keyword Location: para E, line 9
Explanation: It is given that the business tycoons have the power decide to keep the company private or delist it from stock market.

Question 11-14

Do the following statements agree with the information given in passage 1 ?

TRUE - if the statement agrees
FALSE - if the statement contradicts
NOT GIVEN - if there is no information available

Share holders can decide who hold vital positions in a company -

Answer: TRUE
Supporting statement: “........When you buy one, you become partner, or shareholder in the company, and share profits, attend board meetings and vote on key issues and appointments. You can sell your shares anytime you want..........”
Keywords: shareholder, appointments
Keyword Location: para A, line 4
Explanation: it is true that the share holder can vote for the vital positions in the company.

A company can restrict the total number of shares held by any shareholder -

Answer: NOT GIVEN
Explanation: the fact that a company can restrict the no of shares help by share holder is not given in the passage.

Buyer activity is an important factor to determine the cost of shares.-

Answer: TRUE
Supporting statement: “.........One of the main factors is the behaviour share holders. If huge chunk of investors think the price of a share is going to rise and buy it, the price of the share will rise until they stop buying........”
Keywords: holders, price
Keyword Location: para C, line 4
Explanation: It is given that the main factors in deciding the price of the share is the number of people buying the share.

A company can easily plan to go public as there is lack of organized process -

Answer: FALSE
Supporting statement: “........The constantly changing difference between the market capitalisation (the total value of all a company's shares at the current market price) and the 'real' value is one of the great topics of stock market
evaluation..........”
Keywords: market, topics
Keyword Location: para B, line 9
Explanation: It is given that the company cannot easily go public. There are criterias that need to be met.

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